What New Sin Stocks Might We See In The Future?

This is a great question: successful investing is all about seeing which way the trends are pointing and investing ahead of the curve. To paraphrase Wayne Gretzky, successful investors invest where the puck is going, not where it is right now.

You see, this is a massive problem for most investors today, and a massive game-changer for investors who are forward-thinking.

Most investors only make an investing decision when everyone else is talking about something, which means the price of their stocks are already driven up. It’s the “magazine cover” syndrome: successful investors know to SELL when a stock is featured on a magazine cover because that’s when most investors will be getting into it and driving the price higher. And, the same is true about selling, too: most investors sell too late, too.

For forward-thinking investors who can push through their fear and invest confidently based on thorough due diligence, investing ahead of the curve means investing in something before it’s recognized by the general public.

In sin stock investing, that means investing in things now before they are considered to be sinful (or, at least investing in it while it’s still in the emerging market stage). And, they sell early and take profits before anyone else does.

So, how can you buy or sell ahead of the curve as a sin stocks investor? By understanding what’s coming up and watching that curve.

Marijuana sin stocks are the emerging market right now; we’ve covered them already because they have a category here on Sin Stocks Report and are widely recognized as sin stocks.

But in the future, if social and political trends continue to move in the way they are, we will probably see the following as sin stocks, or at least as possible sin stocks…

Airlines. Airlines are a frustration among consumers because they charge a lot and the service is, frankly, dismal. It seems like every single day we’re exposed to yet another story about an airline doing something to screw over a customer. Airlines, in many people’s eyes, are a necessity to be endured. The catalyst to make airlines a sin stock: we need just one or two more massively stupid headlines, much like when United Airlines dragged a bloodied doctor off their flight. Unless a disruptor comes along to transform customer service, airlines could become sin stocks simply because they do so much to earn consumer frustration.

Financial institutions. Like airlines, financial institutions are another group that do so much to earn consumer frustration. They charge high fees, their sales people are motivated by hitting a monthly goal instead of serving the customer, and yet it’s impossible to live without them. In fact, we already saw financial institutions come very close to sin stock status during and just after the Great Recession of 2007/2008, because of their part in the mortgage crisis; and we at Sin Stocks Report have already included payday loan companies and other usurious “fast cash lender” companies as sin stocks because they fit the parameters of what a sin stock is.

Energy companies. There are two things going on here that will help to put energy companies into the sin stock status: First is the social movement away from “eco-unfriendly” coal, oil, and gas. With a growing awareness of the impact of climate change, and a social/grassroots movement toward, well, smaller houses, eco-friendly living, self-sustainable living, farm-to-table, electric cars, solar and wind power, etc., I think we’ll energy companies become increasingly considered a sin stock due to their environmental impact. Even nuclear power, which is relatively safe in spite of what a lot of people think, had a significant setback in its popularity (and thus approached sin stock status) following the tsunami that hit Japan and severely damaged a nuclear reactor. Second, energy companies can be frustrating to customers because of rising costs, declining customer service, and declining reliability due to aging infrastructure. So we may see a social push against energy companies. But that positions them perfectly to be sin stocks, since people will still use them; they’ll just hate them!

Fast food/soft drinks/instant food/GMO and pesticide companies. Again, the social trends are pointing away from a lot of fast food, instant food, and sugary foods, and toward things like grow-it-yourself, farm fresh, organic, etc. And with an awareness of obesity as an epidemic, plus an increasing awareness of health issues (and the high cost of healthcare) as a result of salty, sugary, high-in-fat/low-in-value foods, we should see some or all of these become sin stocks. A significant catalyst to making these sin stocks is if fresh-from-the-farm foods become cheaper (right now they are comparatively costly, which tends to only make them available to higher income earners who can afford to have a strong opinion). What will work against sin stock investors to soften the trend and prevent these from becoming sin stocks is if the average wage decreases and/or cost of living increases while people feel extra busy. Then convenience and low cost will reign over a moral opinion.

Overly religious companies. We believe another area of potential sin stocks is, ironically, overtly religious organizations, specifically (but not exclusively) companies run with “Christian principles”. Think: Chik-fil-A or Hobby Lobby. While these companies may have a strong moral position for some things and against others, their positions run counter to many trends right now. As social awareness increases, these companies (and many like them) will be tested on topics like hiring or even serving the LGBTQ+ community. Depending on how social trends are toward Islam or Latino-owned companies (increasingly for or increasingly against), we may see these companies become sin stocks as well.

Companies that use sweatshop labor. This one is going to be harder to identify without a lot of research, and probably only when something bad happens (such as we saw a couple years ago when a clothing manufacturer’s sweatshop supplier’s building tragically collapsed and killed many of the laborers.) Right now, in our privileged North American setting, we are somewhat insulated from it and some companies have seemed impervious to reports that their products are made in sweatshops. (I’m looking at you, Apple.) But as awareness increases, we may see this become a factor in adding companies to the sin stock list. But what will make it harder is that these typically won’t be a certain group of companies selling one specific thing (tech or clothes, for example) but could be any provider.

And even among the general populace, we might see some people considering some of these sin stocks “okay” and others “not okay at all”. That will be the same for the up-and-coming sin stocks identified above. Some people will consider some of these okay, others will consider them not okay at all.

It should be noted that one of the biggest challenges that sin stock investors face when anticipating the future is: will this stock price go UP or DOWN by becoming a sin stock? That will determine whether you want to buy or sell (or short-sell). For example, when people hate airlines, will the price go down? There might be a downward tick but as long as people continue flying then we may not see a tremendous price drop.

DISCLAIMER

Nothing on this site is a recommendation because, hey, I can't read your mind and I don't know what you have in your portfolio, and I'm not a licensed financial advisor. So never EVER trade without doing your due diligence. If you want more information about this fascinating topic, please check out the Sin Stocks Disclaimer page which basically says the same thing but more emphatically.